Sunday, November 8, 2009

The banks will bleed the country dry

Bank of England says financiers are fuelling an economic 'doom loop'

The banking sector must be overhauled as profoundly as in the wake of the Great Depression or financiers will "game the state" over and over again, the head of the Bank of England's financial stability arm has warned. The banks have capitalised on the implicit state guarantee for the financial system. This is the latest incarnation of efforts by the banking system to boost shareholder returns and, whether by accident or design, game the state. The fact that governments repeatedly bail out economies and banks following crises also undermines their pledges of "never again". What is now required is "a financial sector reform effort every bit as radical as followed the Great Depression."

Posted by drewster @ 01:48 PM (1181 views)
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3 thoughts on “The banks will bleed the country dry

  • New theme park opening in the City…..David and his fag fidget nervously as the old Farmer and his collie hang on screaming whilst their go comes to a shuddering end.

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  • C’mon. This scenario was very easy to predict last autumn. No benefit of hindsight. It was bleeding obvious.

    For more READ:

    This “doom loop” works like a relationship between loansharks (the banks) and their victims (taxpayers, who are forced to pay to the sharks, bailing out the banks).

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  • Surely it is a better business plan to do normal banking business in a working economy that to act as a parasite on the state?

    In the scenario we had, where certain speculative activities end up causing a liquidity freeze and the state step in to try to avoid catastrophe, yes the banks are going to take the easy money, but I don’t believe it is in the banks interests to engineer a cycle of such events, this would reduce their revenue streams ( as people lost their jobs & companies and the state went to the wall ) and would inflate away the profits they get from the scheme itself — I guess they could export profits to their masters overseas, but still this would further quicken the demise of the very opportunity they are exploiting. Surely a longer term plan is desirable?!

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